The lights of the Intercontinental Hotel on Front Street display a heart as Toronto encourages people to maintain physical distances as he combats the spread of COVID-19 in Toronto on April 4, 2020. Steve Russell/Toronto Star

Canadian municipalities are asking the federal government for at least $10 billion in emergency funding to cover dramatic revenue losses due to the COVID-19 pandemic.

The Federation of Canadian Municipalities (FCM), which advocates for the country’s local governments, says municipal governments are together facing a minimum of a $10- to $15-billion loss in the near term.

Those losses stem from foregone property taxes, utility charges and user fees — which include an estimated $400 million each month from lost transit ridership.

In its request, the FCM is asking for at least $7.6 billion in direct federal transfers to all municipalities, plus $2.4 billion for those with transit systems. Cities facing challenges supporting public health measures among vulnerable populations would get additional top ups.

Edmonton Mayor Don Iveson, chair of the FCM’s big city mayors’ caucus, said Ottawa has by far the most fiscal room available to help municipalities fill budgetary shortfalls.

“We’re now at the point where the crisis of municipal finance needs to be addressed, and ideally provinces will play a role, but the buck stops with the federal government,” he said during a virtual press conference Thursday.

Iveson said provincial governments have varying capacity to offer municipalities relief. FCM’s request does not include asking provinces for matching funds.

He said the most optimistic forecast shows Edmonton would run a $90-million shortfall this year, with more dire scenarios showing a loss of $260 million. The city gets its core revenue from property taxes and user fees, which have shrunk since the crisis began.

“We’ve had to lay off more than 2,000 people already and frankly, more layoffs will come,” he said.

Iveson said financial help could stall further layoffs and ensure essential services can continue without tax increases and depletion of municipal rainy-day funds.

FCM’s estimates show that with six months of physical distancing measures, Edmonton would run a $216-million loss, equal to 7.2 per cent of its 2020 operating budget. Toronto, meanwhile, would see the most dramatic loss of nearly $1.7 billion, equal to almost 15 per cent of its budget.

Bill Karsten, FCM’s president and a Halifax city councillor, said without funding help, municipalities would have to make “stark choices” in cutting vital services.

Cities are prevented by law to run deficits, meaning municipal governments are required to annually balance any losses. Some municipalities have already announced layoffs and cancelled seasonal hiring.

The Toronto Transit Commission announced Thursday it would temporarily lay off 1,200 workers to help cover the $90 million in monthly revenue loss due to the pandemic.

“Canadians are depending on the services municipal leaders provide, especially for our most vulnerable,” Karsten said. “To be blunt, cutting back frontline services now would put Canadians at even greater risk.”

When asked about whether support is coming for Canada’s municipalities on Thursday, Prime Minister Justin Trudeau wouldn’t commit to an aid package but said Ottawa will “continue to work directly with municipalities to make sure that Canadians get the services they need.”

Karsten said municipal leaders have for weeks sounded the alarm that cities are nearing a fiscal cliff in discussions with Deputy Prime Minister Chrystia Freeland. He said helping municipalities now would put them in good position to kickstart the economic recovery down the road.

Freeland said the same in a news conference Thursday, although she did not say whether an aid package would be delivered.

“Having city services in place is absolutely essential as we think about a potential for restarting the economy,” she said.

Iveson said the COVID-19 pandemic has exposed “deep cracks in this country’s already dated, and non-competitive fiscal framework when it comes to local governments and cities.”

He said municipalities have long operated on financial limitations and merely allowing them to run deficits is “fiscally irresponsible” because local governments lack revenues to fill the budgetary hole created by the crisis during the recovery.

A report released by the FCM on Thursday also advised against a one-time property tax levy as an alternative to federal support, given how it would add costs for households trying to weather the crisis. The organization estimates that six months of physical distancing and no service cuts would require Toronto, for example, to raise residential taxes as high as 56 per cent.

FCM is hoping federal dollars can get to municipalities quickly through existing funding streams, such as using the Gas Tax Fund, which provides direct amounts to cities for local infrastructure.